NO. 84-94 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1984 

EUROPEAN HEALTH SPA, 

Petitioner and Appellant, 

THE HUP4APJ RIGHTS COMMISSION OF 

THE STATE OF MONTANA, and VIOLET 

HADDOW, 

Respondents and Respondents. 

APPEAL FROM: District Court of the Thirteenth Judicial District, 

In and for the County of Yellowstone, 

The Honorable Charles Luedke, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

John K. Addy, Billings, Montana 

For Respondents: 

Keefer, Roybal, Hanson, Stacey & Jarussi; Calvin J. 

Stacey, Billings, Montana 

Kathleen F. Holden, Human Rights Commission, Helena, 

Montana 

Submitted on Briefs: July 27, 1984 

Decided: September 13, 1984 

Filed: .,G . 

Clerk 
Mr. Justice Frank B. Morrison, Jr. delivered the Opinion of 

the Court. 

The Thirteenth Judicial District Court of Montana issued 

a judgment on December 19, 1983, affirming the January 21, 

1983, final order of the Human Rights Commission and awarding 

Violet Haddow (Haddow) $3,500 in attorney's fees. The 

Commission ruled in its order that the European Health Spa 

(Spa) had discriminated against Haddow on the basis of 

marital status. Spa appeals the judgment of the District 

Court. We affirm. 

Violet Haddow was hired by Spa as an instructor in May 

of 1977. She was reclassified to a counselor/consultant in 

September of 1977. A counselor/consultant solicits 

memberships in the Spa. As a counselor, Haddow never failed 

to produce commissions equalling or surpassing her monthly 

draw of $500. In fact, from September 1977 until July 1978, 

Haddow averaged approximately $890.00 a month in commissions. 

She was consistently above the 50th percentile in sales 

totals for the Rocky Mountain area. 

Haddow requested and subsequently took vacation leave 

from August 3 to August 11, 1978. On August 7, 1978, 

Haddow's husband, John Haddow, was terminated as manager of 

the Spa. The reason given for his termination was 

mismanagement of funds. 

European Health Spa places a ceiling on commissions spa 

managers can receive for spa memberships they, themselves, 

sell. John Haddow transferred some of his own membership 

sales to Spa counselors and subsequently obtained from them 

the commissions they received for those sales. He also was 

accused of failing to record spa membership sales and 

pocketing the proceeds from those sales. (The Commission's 

revised findings of fact nos. 15, 16 and 17.) 
Violet Haddow visited the Spa on August 9, 1978. The 

new manager's wife overheard Haddow stating that her husband 

had been fired because the new manager had personal 

connections with company management and that a petition to 

oust the new manager and reinstate her husband would be 

circulated. Haddow was subsequently called from the exercise 

floor and fired by the new manager. 

On August 28, 1978, Haddow filed a complaint alleging 

that she was discharged because she is the wife of the 

recently-discharged manager; and, that her discharge violated 

the marital status discriminati-on prohibitions of the Human 

Rights Act, section 49-2-303 (1) (a) , MCA. 

Spa denied the allegations and claimed that Haddow was 

fired for several nondiscriminatory reasons. Specifically, 

Violet Haddow : (1) was aware of her husband's kickback 

scheme involving the commissions (p. 103 of the transcript of 

the June 26, 1980, hearing before the examiner) ; (2) failed 

in her weekend responsibilities as assistant-manager; (3) was 

behind in sales production; (4) sold three, one-month 

memberships (against company policy) and pocketed the 

proceeds; and (5) was grossly insubordinate in her behavior 

on the day she was discharged. 

A hearing was held before a hearings examiner on June 

26, 1980. Haddow presented substantial evidence to refute 

Spa's allegations, including records of commissions she 

earned, documents contradicting Spa's assertion that she was 

assistant manager, the Spa's employee handbook setting forth 

the procedures to be followed prior to terminating an 

employee and a "Personnel Action Notice" documenting Violet 

Haddow's termination prepared on August 4, 1978 and 

indicating an effective date of August 7, 1978. 
Coincidentally, the same dates appear on John Haddow's 

"Personnel Action Notice." 

Findings of fact, conclusions of law and a proposed 

order were issued October 6, 1980, by the hearings examiner. 

He found that Spa had decided to terminate Haddow on August 

4, 1978, the same date they decided to discharge her husband. 

He further found a lack of substantial credible evidence to 

support all of Spa's alleged reasons for discharging Haddow 

except her insubordinate conduct on August 9, 3.978. 

Regarding that conduct, he stated: "Haddow's behavior in the 

locker room may well be valid grounds for discharge, however, 

I cannot say as a matter of fact that it overcame and 

replaced the prior decision on August 4 to discharge Haddow." 

(Finding of fact no. 27). Then, citing McDonnell Douglas 

Corp. v. Green (1973), 411 U.S. 792, 93 S.Ct. 1817, 36 

L.Ed.2d 668, the hearings examiner held that Spa's alleged 

reasons for terminating Haddow were merely '% pretext for 

marital status discrimination. " (Conclusion of 1a.w no. 2. ) 

Finally, because of her improprietous conduct, he denied 

Haddow back pay. (Conclusion of law no. 3.) 

Exceptions were filed, briefed and orally argued before 

the Human Rights Commission. The Commission issued a 

proposed opinion September 30, 1981, adopting the examiner's 

conclusion that the Spa had discriminated against Haddow, but 

awarding her back pay in the amount of $7,489.81, with 

interest at 10%. 

Spa filed a petition for judicial review in the 

Thirteenth Judicial District on November 16, 1981. The trial 

judge determined that the Commission had failed to review the 

complete record, pursuant to section 2-4-621 (3), MCA, before 

increasing the award to Haddow recommended by the examiner. 
Thus, the case was remanded for further review by the 

Commission. 

Upon review of the entire record, the Commission issued 

a final ord.er with revised findings and conclusions, dated 

January 21, 1982. The final order upheld the Commission's 

initial holding and award of back pay with interest. It also 

upheld the findings and conclusions of the examiner that 

Spa's reasons for Haddow's discharge were a pretext for 

marital status discrimination, citing McDonnell. 

Spa again filed a petition for judicial review. The 

District Court affirmed the Commission's final order and 

awarded Haddow $3,500 in attorney's fees. From that 

judgment, Spa appeals the following issues: 

1. Whether the District Court erred in using the test 

in McDonnell rather than the "dual motivation theory" of Mt. 

Healthy City School District Board of Education v. Doyle 

(1977), 429 U.S. 274, 97 S.Ct. 568, 50 L.Ed.2d 471, when 

reviewing the decision of the Montana Human Rights 

Commission; and 

2. Whether the District Court erred in its 

determination that Violet Haddow is entitled to back pay with 

interest from the date of the hearing examiner's 

determination? 

The United States Supreme Court, in McDonnell set forth 

a test for determining whether employment discrimination 

exists under Title VII of the Civil Rights Act of 1964, when 

an employee is discharged for both discriminatory and 

nondiscriminatory reasons. The test was explained in Texas 

Deptartment of Community Affairs v. Burdine (1981), 450 U.S. 

248, 252-253, 101 S.Ct. 1089, 1093, 67 L.Ed.2d 207, 215: 

"First, the plaintiff has the burden of proving by 

the preponderance of the evidence a prima facie 

case of discrimination. Second, if the plaintiff 
succeeds in proving the prima facie case, the 

burden shifts to the defendant 'to articulate some 

legitimate, nondiscriminatory reason for the 

employee's rejection.' Third, should the defendant 

carry this burden, the plaintiff must then have an 

opportunity to prove by a preponderance of the 

evidence that the legitimate reasons offered by the 

defendant were not its true reasons, but were a 

pretext for discrimination." (Citations omitted) 

Mt. Healthy involves a constitutionally protected, first 

amendment right. Mr. Green was a nontenured school teacher 

in the Mt. Healthy City School District. He was denied 

tenure and discharged for "'a notable lack of tact in 

handling professional matters which leaves much doubt as to 

your sincerity in establishing good school relationships."' 

Mt. Healthy, 429 U.S. at 282, 97 S.Ct. at 574, 50 L.Ed.2d at 

481. One stated indiscretion was an activity 

constitutionally protected by the First Amendment. The other 

stated reason was an incident in the school's cafeteria which 

did not involve a constitutionally protected act. The 

Supreme Court remanded the case with the following 

instructions for determining whether Mr. Green's discharge 

was a violation of his first amendment rights. 

"Initially, in this case, the burden was properly 

placed upon respondent to show that his conduct was 

constitutionally protected, and that this conduct 

was a 'substantial factor' - or, to put it in other 

words, that it was a 'motivating factor' in the 

Board's decision not to rehire him. Respondent 

having carried that burden, however, the District 

Court should have gone on to determine whether the 

Board had shown by a preponderance of the evidence 

that it would have reached the same decision as to 

respondent's reemployment even in the absence of 

the protected conduct." Mt. Healthy, 429 U.S. at 

287, 97 S.Ct. at 576, 50 ~T~d.2d at 484. (footnote 

omitted) 

In Martinez v. Yellowstone County Welfare Department 

(Mont. 1981), 626 P.2d 242, 38 St.Rep. 474, we adopted the 

McDonnell test for employment discrimination cases filed 

under section 49-2-303, MCA, which involve disparate 

treatment of a protected class because "[tlhe provisions of 
Title 49, Montana Human Rights Act, are closely modeled after 

Title VII of the Federal Civil Rights Act of 1964. . . ." 

Martinez, 626 P.2d at 245, 38 St.Rep. at 477. Marital status 

is defined as a protected class in Thompson v. Board of 

Trustees, School District No. 12, Harlem, Blaine County, 

(Mont. 1981), 627 P.2d 1229, 1231, 38 St.Rep. 706, 709. 

Since the instant case was filed under section 49-2-303, MCA, 

and involves a member of a protected class, we see no reason 

to deviate from our posit.ion in Martinez. The McDonnell test 

is the appropriate test in this case. 

The second issue presented to this Court is whether or 

not the Commission erred in awarding Haddow back pay when the 

hearings examiner refused to do so. We find. no error. 

The hearings examiner held as a matter of law that 

Haddow was not entitled to any pecuniary award, stating: 

". . . Haddow's improprietous actions were no doubt 

soon discovered after her discharge. The 

respondent would have had and did have adequate 

justifiable grounds to discharge her once it 

discovered the improper activities of the charging 

party." (Hearings examiner's conclusion of law no. 

3 

"The Commission may reject or modify an examiner's 

conclusions of law." City of Billings v. State of Montana 

Human Rights Commission (Mont. 1984), 681 P.2d 33, 37, 41 

St.Rep. 688, 693. Section 2-4-621 (3) , MCA. After reviewing 

the entire record, the Commission substantially changed the 

hearings examiner's conclusion: 

"Conclusive substantial credible evidence that 

Violet Haddow has committed improprietous action is 

not part of the record. The Respondent may have 

had adequate justifiable grounds to discharge her 

once it determined in a fair manner that she was 

involved in improper business activities. The 

Respondent's handbook sets forth a procedure for 

such a discharge and Section 49-2-303, MCA, clearly 

permits such a discharge. Neither was heeded in 

these circumstances." (Commission's final order, 

conclusion of law no. 3) 
The Commission then awarded Haddow $7,489.81, with 

interest thereon at 10% per annum from the date of the 

hearing, June 26, 1980, until the date paid. The sum 

represents the amount Haddow would have earned through June 

30, 1979, the date she left the Billings, Montana area. 

Section 49-2-506 (1) (b) , MCA, gives the Commission 

discretionary authority "to rectify any harm, pecuniary or 

otherwise," to the person against whom discrimination is 

found . 

Neither the District Court nor this Court may alter the 

conclusi.on of the Commission absent a finding that such 

conclusion is arbitrary and capricious. Section 2-4-704 (2), 

MCA. City of Billings v. Billings Firefighters Local No. 521 

(Mont. 1982), 651 P.2d 627, 39 St.Rep. 1844. The award of 

back pay is supported by the evidence discussed above and is 

well within the powers of the Commission. It was neither 

arbitrary nor capricious. 

The judgment of the District Court approving the order 

of the Human Rights Commission is affirmed. 

We concur: 

- Chief Justice